Japan has announced the closure of a fund set up to help women from neighbouring countries forced into military brothels during World War II.

Former Prime Minister Tomiichi Murayama, who headed the fund, said it had achieved its purpose and would close in March 2007.

The government had supported the fund rather than given formal compensation.

Campaigners criticised the decision to close it, saying Tokyo was trying to avoid responsibility for the past.

The Asian Women's Fund was set up in 1995, based on cash donations from the Japanese public. The fund paid 2m yen ($19,470) each in compensation, plus medical and welfare support, to 285 so-called "comfort women" in the Philippines, South Korea and Taiwan.

It also gave medical aid to 79 Dutch women who were forced into having sex by Japanese troops in Indonesia.

The government met administration costs but refused to finance it, saying the issue of sex slaves was dealt with under post-war peace treaties.

An estimated 200,000 women from across Asia were forced to work in Japanese military brothels during World War II.

Mr Murayama said the fund would be dissolved when housing projects for the elderly in Indonesia were completed in two years' time.

"We have been able to carry out atonement projects to those former 'comfort women' who desired them. In that sense, we think that the fund's atonement projects have basically achieved their aims," he said in a statement.

Many former sex slaves have refused to apply to the fund, arguing that the Japanese Government should pay them directly.

Tokyo has also not offered an official apology to former "comfort women", and refused to even recognise them until 1992. Two years later, they were mentioned for the first time in school text books.

The issue continues to damage Japan's relations with its Asian neighbours.